Archegos built massive equity exposure using total-return swaps instead of owning shares outright.
Its positions were concentrated in a small set of stocks such as ViacomCBS, Discovery, and Chinese tech names.
When ViacomCBS fell and margin requirements rose, Archegos could not meet collateral calls.
Multiple prime brokers began liquidating positions simultaneously, triggering a collapse in those stocks.
Over $10 billion in losses hit major banks including Credit Suisse, Nomura, and Morgan Stanley.
Archegos imploded within days, exposing hidden leverage in the family-office ecosystem.

What Drove the Collapse

extreme leverage built through total-return swaps that hid true exposure
concentrated, correlated bets that unraveled together when one name dropped
prime brokers seeing only their slice of risk, not the full aggregated exposure
margin calls that triggered disorderly, simultaneous fire-sales across banks
liquidity evaporating as multiple brokers dumped the same stocks at once
regulatory gaps that let a family office escape disclosure and oversight requirements

The Investor Lessons

synthetic leverage can be more dangerous than traditional leverage because exposure is hidden
transparency matters — lenders must assume unseen correlated risk
concentration + leverage is always fragile, even in “safe” markets
liquidity disappears when everyone sells the same names at once
derivatives can obscure real economic positions, masking risks until they are catastrophic
risk must be measured across total exposure, not just cash holdings or single-broker relationships

Archegos (2021)